THE DEFINITIVE GUIDE TO CMA EXAM FORMULAS
1246.44
THE DEFINITIVE GUIDE TO
CMA EXAM FORMULAS
SECTION A1: FINANCIAL STATEMENTS THE STATEMENT OF FINANCIAL POSITION
THE ACCOUNTING EQUATION
ASSETS = LIABILITIES + EQUITY
SAMPLE BALANCE SHEET
ASSETS: CURRENT ASSETS CASH ACCOUNTS RECEIVABLE INVENTORY SHORT-TERM PREPAIDS NON-CURRENT ASSETS LONG-TERM PREPAIDS EQUIPMENT BUILDING LAND LESS: ACCUM. DEPRECIATION
TOTAL ASSETS:
ABC COMPANY BALANCE SHEET AS OF DECEMBER 31, 20XX
$###,### ###,###
$###,###
LIABILITIES: CURRENT LIABILITIES ACCOUNTS PAYABLE ACCRUED EXPENSES SHORT-TERM NOTES PAYABLE DEFERRED REVENUE NON-CURRENT LIABILITIES BONDS PAYABLE
EQUITY: COMMON STOCK ADDITIONAL PAID IN CAPITAL RETAINED EARNINGS
TOTAL LIABILITIES AND EQUITY:
$###,###
###,### ###,### $###,###
DEFINITION
A STATEMENT OF FINANCIAL POSITION TELLS YOU WHAT THE COMPANY OWNS (ASSETS), HOW MUCH THE COMPANY OWES TO ITS CREDITORS (LIABILITIES) AND THE RESIDUAL INTEREST OF THE COMPANY (EQUITY). BALANCE SHEET STATEMENT ACCOUNTS ARE REAL OR PERMANENT ACCOUNTS WHICH ARE CARRIED FORWARD INTO THE NEXT ACCOUNTING PERIOD. THEREFORE, THE BALANCES REFLECTED IN A STATEMENT OF FINANCIAL POSITION ARE THE ACCUMULATION OF TRANSACTIONS FROM THE INCEPTION OF THE ENTITY TO THE CURRENT REPORTING PERIOD.
PURPOSE
THE BALANCE SHEET REFLECTS THE FINANCIAL POSITION OF AN ENTITY AT A PARTICULAR POINT IN TIME.
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SECTION A1: FINANCIAL STATEMENTS STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS
NET INCOME = REVENUE ? EXPENSES
SAMPLE INCOME STATEMENT
ABC COMPANY INCOME STATEMENT FOR THE PERIOD ENDING: DECEMBER 31, 20XX
SALES REVENUE SERVICE REVENUE TOTAL REVENUE LESS: COST OF GOODS SOLD GROSS PROFIT LESS: OPERATING EXPENSES NET INCOME BEFORE TAX INCOME TAX EXPENSE NET INCOME
$###,### ###,###
$###,### ###,### ###,### ###,### ###,### ###,###
$###,###
DEFINITION
INCOME STATEMENT REFLECTS WHAT THE COMPANY EARNED (REVENUES) AND HOW THE RESOURCES OF THE COMPANY WHERE SPENT (EXPENSES) IN ORDER TO PRODUCE THOSE REVENUES OVER A PERIOD OF TIME. INCOME STATEMENT ACCOUNTS ARE NOMINAL OR TEMPORARY ACCOUNTS WHICH ARE CLOSED AT THE END OF THE REPORTING PERIOD TO THE RETAINED EARNINGS EQUITY SECTION OF THE BALANCE SHEET. THEREFORE, AT THE BEGINNING OF EACH CALENDAR OR FISCAL YEAR, ALL INCOME STATEMENT ACCOUNTS ARE ZERO.
PURPOSE
THE INCOME STATEMENT PRESENTS THE FINANCIAL PERFORMANCE OF AN ENTITY DURING A SPECIFIED PERIOD OF TIME.
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SECTION A1: FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
SAMPLE STATEMENT OF CASH FLOWS
ABC COMPANY STATEMENT OF CASH FLOWS (INDIRECT METHOD)
FOR THE PERIOD ENDING: DECEMBER 31, 20XX
CASH FLOWS FROM OPERATING ACTIVITIES PROFIT / (LOSS) BEFORE TAXATION ADJUSTMENTS FOR: DEPRECIATION AMORTIZATION INVESTMENT INCOME INTEREST EXPENSE PROFIT / (LOSS) ON THE SALE OF PROPERTY, PLANT & EQUIPMENT PROFIT / (LOSS) ON THE SALE OF INTANGIBLE ASSETS WORKING CAPITAL CHANGES: (INCREASE) / DECREASE IN TRADE AND OTHER RECEIVABLES (INCREASE) / (DECREASE) IN INVENTORIES INCREASE / (DECREASE) IN TRADE AND OTHER PAYABLES CASH GENERATED FROM OPERATIONS INTEREST PAID INCOME TAXES PAID DIVIDENDS RECEIVED NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES BUSINESS ACQUISITIONS, NET OF CASH ACQUIRED PURCHASE OF PROPERTY, PLANT AND EQUIPMENT PURCHASE OF INTANGIBLE ASSETS PROCEEDS FROM SALE OF EQUIPMENT PROCEEDS FROM SALE OF INTANGIBLES ACQUISITION OF INVESTMENTS INVESTMENT INCOME NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES PROCEEDS FROM ISSUE OF SHARE CAPITAL PROCEEDS FROM LONG-TERM BORROWINGS PAYMENT OF LONG-TERM BORROWINGS NET CASH USED IN FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$42,300
4,700 1,000 (5,000) 4,000
300 ?
(8,700) (3,500)
4,400 39,500 (2,800) (4,000)
1,850 34,550
(17,500) (4,300) ? ? ?
(10,000) 4,800
(27,000)
? 10,000 (3,950)
6,050 13,600
1,600 $15,200
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DEFINITION
THE STATEMENT OF CASH FLOWS (SCF) IS THE REPORT THAT CONTAINS THE INFLOWS AND OUTFLOWS OF CASH DURING A SPECIFIED PERIOD OF TIME.
PURPOSE
THE SOURCES AND USES OF CASH CAN BE CLASSIFIED AS: A) OPERATING CASH FLOWS ? INCLUDES CASH FLOWS FROM TRANSACTIONS THAT AFFECT THE FIRM'S NORMAL OPERATIONS SUCH AS CASH RECEIVED FROM CUSTOMERS AND CASH PAID FOR SUPPLIERS. B) INVESTING CASH FLOWS ? CONTAINS CASH FLOWS WHICH RELATES TO ACQUISITION AND DISPOSAL OF NON-CURRENT ASSETS SUCH AS CASH PAID FOR THE ACQUISITION OF FIXED ASSETS. C) FINANCING CASH FLOWS ? CONSISTS OF CASH FLOWS FROM TRANSACTIONS AFFECTING LONG-TERM DEBT AND EQUITY OR THE CAPITAL STRUCTURE OF AN ENTITY SUCH AS ISSUANCE OF BONDS AND COMMON STOCK.
SECTION A1: FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME
SAMPLE STATEMENT OF COMPREHENSIVE INCOME
ABC COMPANY STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDING: DECEMBER 31, 2011
Profit for the year Other comprehensive income Gains on revaluation of land and buildings Available-for-sale financial assets Cash flow hedges Currency translation differences Other comprehensive income for the year, net of tax
Note
Year ended 31 December
2011
2010
9,500
8,430
?
600
(120)
?
(3)
45
740
(92)
617
553
Total comprehensive income for the year
$10,117
$8,983
DEFINITION
COMPREHENSIVE INCOME INCLUDES ALL CHANGES IN EQUITY EXCEPT THOSE TRANSACTIONS EXECUTED BY THE OWNERS OF THE COMPANY SUCH AS OWNER'S CONTRIBUTION AND DISTRIBUTION. COMPREHENSIVE INCOME IS BROADER IN SCOPE AS COMPARED TO THE INCOME STATEMENT BY INCLUDING ALL CHANGES IN EQUITY EXCEPT FOR SHAREHOLDER TRANSACTIONS.
PURPOSE
THE STATEMENT OF COMPREHENSIVE INCOME ENCOMPASSES ALL ITEMS THAT ARE INCLUDED IN THE INCOME STATEMENT BUT THE INCOME STATEMENT MAY NOT COMPRISE ALL ITEMS THAT ARE REFLECTED IN THE STATEMENT OF COMPREHENSIVE INCOME. THUS, COMPREHENSIVE INCOME CONSISTS OF NET INCOME AND OTHER COMPREHENSIVE INCOME. THE OTHER COMPREHENSIVE INCOME ITEMS WHICH ARE NOT INCLUDED IN THE NET INCOME ARE THE FOLLOWING: A) FOREIGN CURRENCY TRANSLATION GAINS AND LOSSES. B) GAINS OR LOSSES AND PRIOR SERVICE COSTS OR CREDITS RELATED TO A DEFINED BENEFIT PENSION PLAN THAT HAVE
NOT BEEN RECOGNIZED AS COMPONENTS OF NET PERIODIC BENEFIT COST. C) UNREALIZED HOLDING GAINS OR LOSSES ON AVAILABLE-FOR-SALE SECURITIES, AND; D) THE EFFECTIVE PORTION OF THE GAIN OR LOSS ON A DERIVATIVE DESIGNATED AS A CASH FLOW HEDGE.
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